COMPANY PROFILE
Partners Against Crime
by John Wilson, Executive Editor
The UK high street is in the grip of what can only be described as an existential crisis as brands that defined it and have guided footfall over many years have struggled for sales and credibility in the digital age. Marks & Spencer, once the darling of the British retail scene, has been forced to close many of its stores while question marks hang over other physical brands including HMV and Debenhams, both of which have had rescue packages offered to them.
Although the binary narrative around this unfurling drama centres around high street versus online, the reality is much more nuanced. Indeed, all platforms have suffered from faltering sales with digital giants such as ASOS posting profit warnings for the first time in their short histories, leading retail analysts to ponder the underlying causes and solutions to what was one of the worst Christmas trading periods on record.
Although not isolated from the crisis, department store John Lewis & Partners has now become the UK’s retail bellwether brand that is modestly bucking the negative trend. Founded in what is still its flagship store in Oxford Street, London, in 1864, the retailer has weathered many storms. According to its own statements for last year, John Lewis had a strong finish to a roller-coaster Christmas trading period with sales up 4.5 per cent in the week to 29 December compared with the same period for 2017. Sales also rose 4.2 per cent in the preceding week.
However, like many of its competitors, John Lewis, which is prescribed by its strapline “Never Knowingly Undersold,” had to engage in high street discounting because the policy means it has to at least match rival’s prices. Apart from shackling its prices to those of its competitors, “Never Knowingly Undersold” also meant that John Lewis was never far from controversy and the front pages of the business press.
Chairman Charlie Mayfield was criticised for allegedly using Britain’s planned EU exit as an excuse for poor trading. Although denying he had blamed Brexit for John Lewis’s troubles, Mayfield had said that the weakness of the pound, which dived in value after the Brexit vote, had increased costs for the business.
Even in the febrile atmosphere of Brexit, John Lewis still remains a standard-bearer for the respectable face of British retail, and this is in part due to its historic and democratic business model. All 83,000 permanent staff are not employees but “partners” in the ownership of thirty-seven department stores, twelve John Lewis at Home outlets, and shops at St. Pancras International and Heathrow Terminal 2. In addition, they are also co-owners of 349 Waitrose supermarkets, an online and catalogue business, a production unit, and a farm, all of which produces annual gross sales of over £11.5 billion.
This means that each partner shares in the benefits and profits of a business that puts them first and gives them a voice in accordance with the vision of John Spedan Lewis who established the partnership.
This democratisation of control is John Lewis’s unique selling proposition in that it is the first employee-owned structure in the retail sector. In 2018, John Lewis & Partners was voted as the eighth-best private employer in the UK, according to recruitment website Indeed.
Profit Protection
The “partnership” approach has helped the group to innovate through staff engagement across the estate. One area where this innovation has helped drive engagement and profitability has been in the area of profit protection as part of a restructure programme led by the head of profit protection for John Lewis, Mark Crowley. Mark, who took on the leadership role for the shrink reduction programme in August 2016, saw the task as nothing short of “reinventing what we do.” “The partnership approach means that we all have a seat at the decision-making table,” he said.
In his day-to-day role, Mark, who reports into Andrew Mounsey, the finance director for John Lewis, is accountable for the delivery of the shrinkage business plan through the effective reduction of crime and process error through partnering with central business leaders to drive net profit. This means adopting a total loss approach looking beyond malicious theft to broader issues of inventory control and partner compliance to make sure that internal processes and procedures are followed when it comes to measuring and managing shrink.
Total Retail Loss was a lauded theory developed by Emeritus Professor Adrian Beck of Leicester University in the UK to move away from an almost exclusive focus on criminal loss to look at a total of thirty-three different categories of shrinkage, many of which have little to do with malicious intent and focus instead upon compliance and training issues to drive better behaviours from staff members. This was an important development in terms of identifying where tight LP budgets and finite resources should be deployed in an ever-changing retail landscape. LP, as a discipline, was moving away from a “cops and robbers” collar-feeling culture to one of non-confrontational customer service, where in the febrile atmosphere of reduced policing, assisting sales trumps criminal convictions every time.
“This is an end-to-end challenge with shrinkage channel agnostic, so it applies to both physical stores and online,” said Mark who joined John Lewis from luxury brand Burberry in 2014.
Whilst many of the crimes may not be visible to the general public, it doesn’t make them any less significant, as Mark and his team discovered in 2018. Last year, for example, they were able to disrupt multi-million-pound attempts at theft and fraud, with a high portion coming from online. With a team stretching to 400 profit protection partners across the country, Mark has set a task of investigating both malicious and non-malicious loss across the estate. Partners are not just chasing criminals but also understanding what happens to all unaccounted-for stock, making a tangible difference to the bottom line.
“It makes us truly commercial, enabling business decisions based on what we choose or can afford to lose” he said.
Mark has invested in recruitment of experienced LP professionals and is putting all of the profit protection management team through WZ training, the non-confrontational interview technique developed in the US in the 1980s now widely used in the retail sector across Europe.
Control Centre
Part of the refocus of profit protection involves the investment in a brand-new control centre located deep in the bowels of the flagship Oxford Street store in London, where operatives can remotely monitor CCTV footage from any of the other stores across the estate in real time. Operating with dedicated security operation centre (SOC) partners, it provides a central hub for branch reporting, remote investigation capability through data mining analysis, and the capability to monitor intelligence of organised retail criminals through real-time updates. The level of investment isn’t insignificant and is a further sign of the business support for reducing “total loss.”
“This approach will mean we can provide a consistent level of support to our fifty-two shops and not have to do things fifty-two different ways. We are also investing in training to put the power back into the partners’ hands, and we are doing this in bite-size ways along the theme of ‘More Care, More Profit,” added Mark.
The number of stores that are linked to the control centre is increasing as the technology is being rolled out across the estate.
Microlearning
Another part of the roll-out is the partner engagement with adaptive “microlearning”—an approach to training that delivers content in short, focused bites personalised to cover the relevant area the partner works in, heavily focusing on partners’ weakest knowledge areas. It is a highly effective way to fill knowledge gaps and ingrain the right behaviours, in part because of the game mechanics that are built into the experience.
Users answer personalised multiple-choice questions, either standalone or embedded in games to keep the experience fun and engaging. It’s a carrot rather than a stick approach where members of the team “learn while they earn” using business devices or their own smartphones during their working day.
Whereas many companies view staff playing games on their computers in the same way that they would view social media abuse—as a distraction to their work and even warranting a warning—companies such as John Lewis are using “gamification” to positively encourage its use. In fact, its success in effectively communicating key learnings and information retention depends upon active participation. Games, leaderboards, and rewards are powerful motivators to keep Partners coming back for more.
For example, many businesses across Europe have struggled with encouraging staff to use whistleblowing lines to report suspicious colleague behaviour, despite widespread poster campaigns in staff locker rooms and canteens and assurances that the telephone line is confidential, independent, and anonymous. Gamification’s track record in driving engagement is dramatically reversing that take up, and retailers across North America, Canada, Australia and Dubai are looking to its properties to stem the tide of dissatisfaction and disengagement that generates poor shrink figures and reduce errors.
Each session on the platform only takes a few minutes, so associates often complete training in their spare time—on breaks or even travelling to and from work. The idea is to encourage staff engagement and compliance in return for John Lewis points, which can be used to bid on raffles and auctions for prizes.
Mark was made aware of the concept through the experience of iconic US department store Bloomingdale’s, which reported a startling set of figures that highlighted new levels of staff engagement through microlearning, a subject covered by LP Magazine Europe in 2015. At that time, thanks to the approach, the US business generated a staggering 90 per cent voluntary engagement across the business and generated $2.2 million in annual savings. In addition, in 2015, microlearning with gamification built in led to an almost 23 per cent reduction in safety incidents because 15,000 members of staff were effectively converted to “living and breathing the safety and LP message every day.” This was achieved by making the initiative more engaging and “fun.” By doing this, associates playing games could remember and apply the knowledge that they had learned to prevent accidents and losses.
In fact, in one Bloomingdale’s store—Boca Raton in Florida—where there was previously low engagement, more than 75 per cent of associates were converted to regularly visit the rewards section of the site, with 96 per cent opting for a virtual coach or avatar, compared to an average of 80 per cent across the rest of the business. In addition, 13 per cent of associates opted to take additional training while a massive 86.6 per cent believed that their on-the-job confidence had improved and 85.5 per cent recognised that the initiative had boosted their participation in the business.
Developed by Canadian microlearning platform specialists Axonify, the name of the game is to make employees remember to do the things that matter most to the business. The learning technique is based on the premise that a lack of learning leads to costly mistakes, and Axonify prides itself on being the only microlearning platform that is built for incremental and measurable business performance among the employees. To this end, it is designed to drive behaviours that improve individual employee performance through training that is neither time intrusive nor onerous.
It is an algorithm-driven platform that Christine Tutssel, founder and head of international business at Axonify, describes as “retrieval-based learning that leads to deeper and long-term understanding.”
“It makes business-critical behaviours stick in the minds of the associates, so they automatically do the right things in the right moments on the front line. It is pushing the individual towards the specific information that they need to know. It is incentive-based game mechanics that is helping them to do their job better,” Christine continued. “We start by establishing a base line for every employee and understanding their individual challenges—where they have the most trouble, for example. And every session we measure what each person knows and doesn’t know, along with how confident they are in applying that knowledge on the job.
“Then the adaptive algorithm fills the knowledge gaps with these digestible bursts of personalised learning. Key information is reinforced until it is ingrained in memory.
“We wanted to bring the company on and give partners access to the technology they already have at home, so they can do the training through the devices, smartphones, or in store through the point of sale. They can do it quickly and get on with their day since it only takes three to five minutes per shift.
“Mark can see all his data across his departments and where the high shrink areas are and easily view where he has high levels of participation and engagement. On the back end, he can analyse the impact of the learning, identifying gaps and opportunities.”
Axonify uses question-driven data via its platform to make sure that partners’ learning is progressing, and these questions can be adjusted to im-prove engagement scores. Retail business in the US accounts for around 30 per cent of Axonify’s global business, but its methodology is also effective in other sectors, including training call centre staff for BT in the UK.
So far, 25 per cent of the John Lewis estate is switched on to the Axonify approach, and engagement levels are high among the partners participating, such as the flagship Oxford Street and Peter Jones department store on the Kings Road.
At Oxford Street, over 1,000 partners use the system, according to Amber Warner, area profit protection manager, who is an advocate of the system.
“We have not seen anything like this in store before. You can access the microtraining programme through a partner device, your own PC or smartphone, or the [electronic point of sale]. You simply log on and answer a series of questions that are relevant to your role,” said Amber from Loughborough, who has worked for John Lewis for more than ten years. “You answer the multiple-choice questions based upon your confidence in the answer—it could be low, medium, or high. If you get the question right, you are awarded points, and this generates greater confidence and healthy competition between other partners as there could be rewards including John Lewis gift cards on offer for the best performers.
“It is very good in this respect because you want to get the right answer, and this is encouraging engagement and compliance. The idea is to tell colleagues to get them involved—and this earns you more points.”
The competitive element is spreading across the John Lewis estate. More than 50 per cent of the Oxford Street store are already gamification converts, whereas in Kingston, Surrey, 53 per cent have signed up. However, both branches have been eclipsed by the Liverpool John Lewis store where 67 per cent are regularly taking part.
“It is so different to what we had before, and it is really helping people play their part. It is not onerous on anyone because we are doing it little and often—and it’s fun. It doesn’t feel like training at all,” continued Amber.
Stewart Wallis, a security operation centre partner in the new control room in Oxford Street, who only joined John Lewis in 2018, said, “This is very new technology, but the team is welcoming it.”
From the long-established to the brand-new partners, there is a real appetite to embrace new ways of working to tackle the multi-platform challenges faced by the business that is continuing to future-proof its offering by involving all levels of the organisation in the decisions taken.
Amber added, “It’s great that this 155-year-old company wants to adapt and change to embrace the challenges in retail. This is a collaborative approach rather than an edict from profit protection. And that collaboration is seamless across the business.”
John Lewis & Partners is seemingly bucking a national trend in terms of the high street downturn, but it has had to work and invest to achieve its continued success. This is where the partner model comes into its own because good ideas can come from either the boardroom or the shop floor as part of a more democratic process of management where profit and pain are shared equally among the 83,000 partners. Mark Crowley’s profit protection approach has fed into this modern zeitgeist and achieved traction through hard work, investment, collaboration, innovation, and literally playing the game by the collective rules of the many over the few. It is the very definition of the difference between external partners in crime and internal partners against crime.
